Entrepreneurship · Business Development

What is the best way to kick out a board member?

Shamim Hasan CEO at Xpart Solutions

September 28th, 2016

Talking about a board member that is also an investor with over 10% equity stake in the business. This board member is adding no value and holding other board members back.
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Don Rector

September 28th, 2016

Talk to your attorney. He needs to review the investment documents. He can then explain what your options are and what is your exposure. Don Rector Pls excuse my typos this was tapped one character a a time on my iPhone

Andrea Raimondi Computer Software Consultant and Contractor

September 28th, 2016

What's the problem with just talking to him? 
Why don't you go to him and say "Look, I have concerns because it seems to me that you are trying to hold us back, What is your fear?"

Or something like that.

There may be things you don't know.

A

Peter Weiss President at American Outlook, Inc.

September 28th, 2016

this is as much a people issue as a legal or formal governance issue.

Talk to your other Board members and significant investors, carefully, and see if they share your view of the problem person.  If they don't you should consider your conclusions and think about whether you need to find a way to create a more productive relationship.  More important, if they don't you may not have the votes to remove him and you could find your position compromised.  Be careful of direct attacks or confrontation, at least until you're sure you have the backing of the other major players.

If they share your perspective they are potential allies who may be able to help approach the Board member and help work through the situation, minimizing disruption and finding a way to persuade him to leave the Board.  

Dave Shepherdson Enterprise Architect -Turning Strategy into Reality

September 28th, 2016

Carefully, depends how the articles are written. If u have a controlling interest it is easy but you need to have the full support of the rest of the board. The soft issues are much harder and needs to be carefully considered. The mechanics are easy. I support the approach Selvan suggested.

Arthur Lipper Chairman of British Far East Holdings Ltd.

September 28th, 2016

Board of Director terms should be two years, not for an indefinite period. Let’s be clear, it is the shareholders who vote annuallyfor either a slate or individual Board members. A single Director cannot hold anyone or anything back unless a majority of the other Board members agree with him. Arthur

Janet McGinty Research, Analysis, Strategy

September 30th, 2016

Your investors and board members are aligned with you with respect to a desire for the company to succeed. The view of the path to success - the plan and execution may differ. Your board member may have some different views and perspectives on risk that you might try to understand.
You took this person's money so you have to be accountable to this person. It is very immature and egotistical to think that the way to deal with people that disagree with you is by eliminating them. I suggest that if you can't come to terms with this person then you buy them out personally. If you can't do this than you better rethink your strategy and attitude because boards can remove founders as well.

Johnathan Proffer Engineer, Innovator, Visionary, Entrepreneur

September 28th, 2016

You should check with your company's bylaws.  There's a few ways you can remove the member - by intervention (talk with them directly and ask them to leave), leave of absence, allow term limits to expire, or impeachment.   This will not change their equity stake, unless it is somehow tied into their member status

Selvan Rajan

September 28th, 2016

You can't. You need to wait until the next shareholders' meeting and in that meeting, you need to elect a new person. The best approach will be by persuading him/her to give up the position for someone more valuable. If he/she is concerned about the money invested, you may get a good support. 

Spencer Jones Rental Manager

September 28th, 2016

It would depend on the bylaws if any and/or any written agreements which would outline options for a fair buyout. If it doesn't, you may want to speak with an attorney; again, depending on your setup.

Neil Gordon Board Member, Corporate Finance Advisor and Strategy Consultant

September 29th, 2016

If you're not talking to individual board members in between meetings, you should. Inform then and lobby them, including the contrary investor, so that there won't be any surprises at the board meeting and members will have had time to think through points they might make in discussions.

You also need to put on your investor relations hat. Kicking a 10% owner off your board will likely create a 10% enemy. Good luck getting any needed cooperation and/or consents going forward.